November 19, 2017
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Debate about state borrowing likely to consume final weeks in legislative session

By Christopher Cousins, BDN Staff
Troy R. Bennett | BDN
Troy R. Bennett | BDN
House Majority Leader Seth Berry, D-Bowdoinham.

AUGUSTA, Maine — There are few issues in Augusta that have caused as much controversy in recent years as borrowing money for large-scale projects. Judging by the rhetoric in Augusta this week, the conflict will continue through the end of the legislative session.

Hanging in the balance are several bond proposals that some lawmakers say are essential to growing the state’s economy and supporting businesses, including a bipartisan $73 million package that the Legislature’s special Workforce and Economic Future Committee has been developing for months.

“We put out our very best ideas after gathering ideas from businesses and communities across Maine,” said House Majority Leader Seth Berry, D-Bowdoinham, who chaired the workforce committee. “This is a $73 million investment that would have a transformative effect on Maine’s economy.”

Also presented Thursday to the budget-writing Appropriations Committee was a bid by Senate Majority Leader Troy Jackson, D-Allagash, for a $10 million bond to expand the lobster processing capacity in Maine; a $30 million proposal from House Speaker Mark Eves, D-North Berwick, to expand the state’s marine and biotechnology sectors; and a $3 million borrowing proposal from Sen. Brian Langley, R-Ellsworth, which would be used to purchase the Bar Harbor Ferry Terminal from the Canadian government.

As lawmakers from both parties presented proposals for tens of millions of dollars in borrowing to the Legislature’s budget committee on Thursday, House Minority Leader Ken Fredette, R-Newport, and Republican Gov. Paul LePage were already voicing concerns.

Adrienne Bennett, a spokeswoman for LePage, said the governor will not commit to supporting any bond proposals until budget-balancing bills under development in the Legislature are enacted to his satisfaction.

“Until the budget is balanced, it is difficult to consider more bonds and the fiscal effect they would have on taxpayers,” wrote Bennett in a prepared statement on Friday. “When Democrats get serious about the budget and balance it properly, the governor will have a better understanding as to where the state is financially.”

LePage has regularly delayed authorizing voter-approved bonds as leverage in his budget wrangling with lawmakers, especially since Democrats gained majorities in the House and Senate in 2012.

Fredette said he and other Republicans see value in some of the bond proposals being discussed, but objected to the concept of “bundling together” numerous proposals in a single question for voters.

“There’s no support in our caucus for a bill that has a bunch of proposals lumped together,” said Fredette.

Any bond proposals would need at least two-thirds support in the Legislature because they would result in statewide referendum questions, which means they’ll have to garner bipartisan support to move forward. That makes the issue of LePage’s support — and whether he would veto a bond bill — somewhat less important because a two-thirds majority in each branch of the Legislature is enough to override a veto.

However, LePage indicated last year during negotiations over nearly $150 million in bond questions — all of which were approved by voters in November 2013 — that he would be open to considering some borrowing for research and development projects. Research and development money is proposed in several of the bond proposals under consideration.

Sen. Dawn Hill, D-Cape Neddick, who co-chairs the Legislature’s budget committee, said the Legislature has worked with LePage to improve financial situations that LePage has cited when holding up the authorization of bonds that have been approved by voters dating back to 2009. Those situations include paying off hundreds of millions in past Medicaid debt to the state’s hospitals last year and building the state’s rainy day fund up to $60 million, which was approved earlier this month.

“None of that is on the table anymore,” said Hill. “I hope the governor remembers his promise [about borrowing for research and development].”

Bennett said LePage’s promise came with the qualification that the research and development needs to end up producing something, most notably jobs.

“The governor has been clear: taxpayer dollars should go to research and development only when commercialization is factored in and it can be demonstrated that a specific return on the taxpayers’ investment will occur,” said Bennett. “That return must be measured in new products to market, new revenue to the state and new jobs created.”

As the debate over bonds gears up, the Appropriations Committee on Friday met with Mark Cyr of the Legislature’s Office of Fiscal Program and Review for a conversation about how much payments on more bonds would cost in the coming years. The state has a long tradition of paying off its borrowing within 10 years.

According to Cyr’s analysis, the state will pay more than $75 million in debt service in each of the years between now and at least 2017 for past bonds that have been authorized. As an example of the impact on the state budget for a new bond package brought to voters later this year, Cyr said $50 million in new spending could cost some $4.5 million in debt payments in fiscal year 2016 and more than $7 million beginning in 2017.

“Ultimately, it does come down to political decisions about what you want to have for debt service,” said Cyr.

The bond debate isn’t likely to move toward resolution until lawmakers and LePage agree on a plan to close a revenue shortage in the fiscal year that begins in July.

 


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